Despite poor payrolls data in the US and a drop in China’s auto sales, oil prices remain solid. US production is holding pace: current output of 12.1 million barrels per day could well rise to 13 million by year-end. We expect a spike in prices to be limited. Currently trading at 56.50, West Texas Intermediate is heading along 57 short-term.
Further sanctions are expected to hit Venezuela’s Maduro regime, and Washington is willing to pressure Venezuela’s second-largest buyer, India, to cease purchases after ordering the same for Iranian crude by threatening trade duties on USD5.6 billion of imported products. Despite US leverage of the NOPEC bill (No Oil Producing and Exporting Cartels Act), it appears that OPEC + is willing to maintain current production until the end-June 2019 OPEC meeting.
Production was down 560’000 bpd in February, the third consecutive cut with December for a total drop of -8%.
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By Vincent Mivelaz